Rise in port charges to raise $20 million

GOING UP: Port charges are increasing for coal ships.THE newly-privatised Port of Newcastle plans to raise an extra $20million a year from navigational charges on coal ships.
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The port owner justifies its new price schedule by saying the per-tonne charges for coal ships had hardly risen for 20years and inflation alone would have seen them increase by more than 70per cent in that time.

Port of Newcastle says the new prices are still lower than the nearest comparable port, Port Kembla.

It says it has ‘‘a responsibility to deliver a commercial return on the investment for its investors, which include 2 million Australian superannuants’’.

It does not think the higher charges will have ‘‘a material impact on local producers’’ and points to robust predictions of growing coal exports and a more profitable Hunter coal industry as the Australian dollar falls, helping the industry’s revenues.

The port was leased in April for 98years to a 50/50 joint venture between Australia’s Westpac-backed Hastings Fund Management and the Chinese state-owned China Merchants Group.

But shipping agents and the shipping industry’s peak body, Shipping Australia, say the increases are far greater than they look on paper because the old pricing schedule was capped at $45,633 per vessel.

They say lots of coal ships visiting Newcastle have gross tonnages of up to 110,000tonnes, meaning the charges would top top $75,000 a vessel.

Their fears are borne out by a letter from Port of Newcastle to its customers, which does not specify a percentage increase in coal ship charges but says ‘‘the increase is approximately 12.7cents per tonne of coal’’.

Based on likely 2014 coal exports totalling 156million tonnes, this equates to an extra $19.8million.

Shipping Australia chief executive Rod Nairn said last week his organisation was pushing Port of Newcastle to put its new charges on hold and to consult with the industry.

‘‘They say that the price per vessel has hardly risen in 20 years but in that time, the volume of shipping through Newcastle has risen dramatically, meaning their income has also risen dramatically, even if the price per vessel has not,’’ Mr Nairn said.

A number of shipping companies had predicted price rises once state-owned ports were privatised, and Mr Nairn said the increases were ‘‘difficult to justify’’.

For non-coal vessels, the navigation charges are rising by 3.9per cent and all prices will rise by another 3.9per cent from January 1, 2016.

In the letter to customers, Port of Newcastle chief executive Jeff Coleman says the price rises are needed to cover the increasing costs of running the port, and that coal ships are the major users of the channels that the company must dredge to keep viable.

A spokesperson said the navigation service charge was still ‘‘a very small part’’ or about 0.5per cent of the delivered cost of coal to overseas buyers.

It was also about the same amount that shipping companies paid for towage by tugs in and out of the port.

Records show that 1663 coal ships, 498 non-cargo vessels and nine cruise ships visited the port in the year to June 30.

The previous financial year, 2012-13, the pre-privatisation Newcastle Port Corporation earned $22.8million after tax from revenues of $97.4million.

That year, the corporation earned $46.2million from the navigation charge, which means a $20million increase could take that figure for the new owner to more than $65million.